Friday Morning Market Prepper
— George Kikvadze (@BitfuryGeorge) December 29, 2016
— IamAnirudhSethi (@Iamanirudhsethi) December 30, 2016
Politics, economics and markets were all turned on their head in 2016, and investors are looking ahead to 2017 following a turbulent year. Highlights: The Panama Papers, Dieselgate settlement (OTCPK:VLKAY), Greek debt relief, Megabrew (BUD, OTCPK:SBMRY), the EU's tax crackdown, sale of Yahoo (NASDAQ:YHOO), nuclear test and impeachment in Korea, Pokemon Go (OTCPK:NTDOY), Twitter (NYSE:TWTR) takeover rumors, Brexit and sterling's plunge, the Italian referendum, panic at Deutsche Bank (NYSE:DB) and Monte dei Paschi (OTCPK:BMDPY), OPEC's output deal, and following Donald Trump's election - a Fed rate hike, the dollar's surge and soaring treasury yields. The Dow, S&P and Nasdaq also partied like it was 1999 - the three markets all closed at historic highs for the first time in 17 years.
Responding to its alleged interference in the 2016 presidential election, the Obama administration unveiled new sanctions against Moscow on Thursday, while expelling 35 Russian diplomats and closing two Russian compounds in the U.S. "It's time for our country to move on to bigger and better things," President-elect Donald Trump declared. "Nevertheless... I will meet with leaders of the intelligence community next week in order to be updated on the facts of this situation."
In retaliation to Washington's sanctions, Russian Foreign Minister Sergei Lavrov has proposed expelling 35 U.S. diplomats and ban American staff from using a dacha and a warehouse in Moscow. "We can't, of course, leave such steps without a response," he said in televised comments. "Reciprocity is a law of diplomacy and international relations."
The euro surged as much as 1.6% against the dollar overnight as a rush of computer-generated orders caught traders off guard. The sudden move started under $1.05 and algorithmic orders snowballed above that level, causing what little liquidity there was on the year's last trading day to vanish. In minutes, the currency jumped to a high of $1.0653, forcing some dealers to take losses to cover positions.
Germany's Angela Merkel will deliver her traditional New Year's speech on Saturday, an event which has taken on more significance because of the rise of the right in the past two years and an influx of migrants. Last year, the Chancellor argued that refugees were good for the economy, but she faces growing criticism that her policy has allowed terrorists to enter Germany undetected.
A nationwide ceasefire in Syria, brokered by Russia and Turkey - which back opposing sides in the conflict - got off to a shaky start after midnight in the latest attempt to end nearly six years of bloodshed. Monitors reported clashes between insurgents and government forces in several locations, but the warring sides appeared to have stopped firing in many other areas.
Italy's Banca Monte dei Paschi, which is being bailed out by the state, plans to issue €15B of debt next year to restore liquidity and boost investor confidence, according to several reports. BMPS's (OTCPK:BMDPY) debt sales would be supported by government guarantees. They form part of a liquidity scheme for "banks in need," which the European Commission has agreed to extend for six months.
Rap group Run-DMC has filed a $50M lawsuit in New York accusing Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT) and other retailers of selling products that traded on the group's name and logo without permission. In November, Amazon filed its first lawsuit against merchants who sell counterfeit products through their online marketplace in an effort to keep fakes off the site for the holiday season.
Kate Spade plans to kick off a formal auction process next month, with interest from six possible bidders, sources told Bloomberg. A sale would cap a comeback for a brand that struggled to recover from the last recession and had to rely heavily on discounts to attract customers. Potential bidders for Kate Spade (NYSE:KATE), which has a market value of about $2.3B, are mostly other retailers.
Toshiba shares rebounded 9.4% overnight as retail investors covered their short positions before the year end. Fears of a multi-billion dollar writedown at Toshiba's (OTCPK:TOSYY) U.S. nuclear business saw the stock tumble earlier in the week, leaving it 36% lower week-to-date. The goodwill charge relates to subsidiary Westinghouse's purchase of CB&I's (NYSE:CBI) nuclear construction unit in Dec. 2015.
Another surge in Tokyo... Takata (OTCPK:TKTDY) rocketed up 21%, soaring for a second straight day, after Reuters reported that the air bag maker could settle criminal charges with the DOJ before the Obama administration leaves office in January. Faulty inflators from the company, which can send metal shrapnel flying inside a vehicle, have been linked to at least 16 deaths worldwide, including 11 in the U.S.
Meizu Technology has agreed to pay Qualcomm (NASDAQ:QCOM) licensing fees to settle legal battles in China, demonstrating the U.S. company can defend its intellectual property in the world's largest smartphone market. The deal also ends similar patent conflicts in Germany, France and the U.S., the two companies said in a statement.
After announcing its 40,000 robot workforce in October, Foxconn (OTC:FXCOF) is automating production at its factories in China in three phases, aiming to fully automate entire factories eventually. Foxconn also announced plans with Sharp (OTCPK:SHCAY) to invest 61B yuan ($8.8B) to build a new Chinese plant that will produce liquid-crystal displays.
Advertiser demand is still stronger for football than for nearly anything else on TV, but Monday Night Football wasn't immune to overall ratings declines in 2106. ESPN (NYSE:DIS) has closed the books on the second-worst season for MNF - the program averaged 11.4M viewers over 17 games this year, better only than the 2007 season (11.2M on average). Exception to the rule: Last Monday's game between the Dallas Cowboys and Detroit Lions (it averaged 18.6M viewers).
The end of the year brings lots of contract deadlines in pay TV, including a carriage dispute between NBCUniversal (NASDAQ:CMCSA) and Charter (NASDAQ:CHTR). A potential black-out would affect around 16M subscribers, taking NBCU stations (including broadcast NBC, Telemundo, Bravo, E!, Syfy, USA, MSNBC, CNBC, and Oxygen) off the air from Jan. 1. Variety reports that Charter has rejected a package price similar to that paid by other distributors and that negotiations have stalled.
Petrobras announced a flurry of asset sales as the year wound down, selling a total value of $13.6B over the 2015-2016 period, but still missed its $15.1B divestment target. The shortfall was attributed to a court order that blocked the sale of various oil fields in Brazil. As a result, Petrobras (NYSE:PBR) raised its 2017-2018 divestment goal to $21B from $19.5B, trying to tackle $123B in debt.
U.S. authorities have given the green light to the takeover of German robotics maker KUKA (OTCPK:KUKAY) by China's Midea. As a result, all the conditions for closing the tender offer have been met and the settlement of the deal can be expected in the first half of January. Midea will control a 94.55% voting stake in KUKA following its purchase.
Johnson & Johnson is talking about breaking up Actelion (OTCPK:ALIOY) in an acquisition deal that would separate its commercialized portfolio from its research and development assets, Reuters reports. The deal structure would allow J&J (NYSE:JNJ) to acquire Actelion with a cash offer in the region of $260 per share, a little more than what it had offered when it walked away from negotiations earlier this month.
Mylan rose 2.2% in extended trading after it launched a generic version of Janssen's (JNJ) Concerta tablets. The drugmaker received final approval from the FDA for its product, which is intended to treat ADHD. The news is one of a string of new generics Mylan (NASDAQ:MYL) is announcing, including a generic version of Zovia (NYSE:AGN) tablets and a generic Cerebyx (NYSE:PFE) injection.
Jack Dorsey has taken to Twitter (TWTR) to ask users what the company can do to "improve or create in 2017." Responding to several replies, Dorsey said he's "thinking a lot" about adding an edit-tweet button, and is also considering other suggested ideas, including better threading for conversations, a bookmarking tool and multiple timelines based on interests.
In Asia, Japan -0.2%. Hong Kong +1%. China +0.2%. India +1%.
In Europe, at midday, London -0.3%. Paris -0.2%. Frankfurt -0.2%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.1% to $53.83. Gold +0.2% to $1159.90.
Ten-year Treasury Yield flat at 2.48%